A class-action lawsuit has been filed in New York against sweepstakes operator VGW as well as Apple and Google, alleging participation in illegal gambling.
The suit claims the three organizations knowingly profited from what the lawsuit says should be considered an illegal online casino operation under New York state law. The lawsuit was filed Monday in the Southern District Court of New York and asks for charges, including some that fall under the RICO Act.
“Playing games of chance on VGW’s websites, or by downloading VGW’s apps to a personal electronic device like a cell phone or tablet, satisfies New York’s statutory definition of ‘gambling’ and renders the device a ‘gambling device’ as those terms are defined at N.Y. Penal Law §§ 225.00(2) and (7), respectively,” according to the lawsuit.
This is the first lawsuit filed in New York against sweeps operators, but others have been filed in multiple states.
Suit: VGW ‘misleading’ regulators
VGW, which operates three of the more popular sweeps brands in the market in Chumba Casino, LuckyLand Slots and Global Poker, has been successful in “misleading regulators” about what its products offer, the suit alleges.
“The VGW Defendants have succeeded in misleading regulators about the true nature of their operations for far too long. These Defendants are not licensed casinos. They are not regulated by any casino regulator as a traditional, licensed casino would be.
“No one is looking over anyone’s shoulder to ensure that the digital dice aren’t loaded. And the VGW Defendants have, thus far, managed to entirely insulate themselves from civil liability by hiding behind an iron curtain of bizarre arbitration agreements, many of which require arbitration in far flung locales like Malta and elsewhere.”
Some regulators have acted on VGW, others
Some state gaming authorities have taken the stance presented in the lawsuit and have banned sweepstakes operators in an attempt to protect their regulated gaming market and operators.
Delaware and Michigan were two of the first states to send cease-and-desist letters to sweepstakes operators. The American Gaming Association circulated a memo this summer to ask regulators to investigate the operations.
It is not just regulators considering potential lost revenue for gaming operations. The California Nations Indian Gaming Association has also vocalized its opposition to sweeps and daily fantasy sports operators.
Sweeps operators disagree
The companies and investors behind these sweepstakes operators are not simply accepting defeat.
Multiple companies operating social and sweepstakes gaming platforms joined together to launch the Social and Promotional Gaming Association in September. The group put up a nearly half-hour video breaking down the mechanics of how these operations work and why they are legal.
“The formation of the SPGA is a critical step toward establishing a clear and cohesive voice for the social sweepstakes industry,” said Seth Schorr, the CEO at FSG Digital Inc. “By creating this association, we are committed to helping regulators and policymakers understand how our industry’s products work and how they comply with the appropriate state and federal laws.”
